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ASX 200 afternoon report: 7 December 2023

Your ASX 200 afternoon report.

Source: Bloomberg

The ASX 200 trades 22 points (-0.30%) lower at 7157 at 2.30 pm AEDT.

Market quiets down amid RBA's dovish stance

In contrast to yesterday's barnstorming run higher, it's been a much quieter session today as the repercussions of the RBA's dovish hold and sub-par GDP print yesterday continue to be felt. This morning, the rates market pulled forward expectations for the RBA's first 25bp rate cut in 2024 from November to August. There is now a total of 40bp of RBA rate cuts priced into the Australian interest rate market for 2024.

As viewed in the US and Europe in recent months, expectations of one "insurance rate cut" can quickly become three and then five. For those wondering what expectations of multiple rate cuts can do for equity markets, look no further than the performance of the S&P 500 or the DAX in recent weeks.

Today's market movements

Energy Sector

The ASX 200 energy sector, previously up 40% in 2022, is poised to conclude the year with a 10% decline. This is after a 4% overnight plunge in crude oil prices to below $70 per barrel.

  • Cooper Energy: - 6.82% to $0.10c
  • Santos: - 2.51% to $6.61
  • Beach Energy: - 1.71% to $1.44
  • Woodside Energy: -1.81% to $29.30 - an eighteen-month low

Consumer-facing stocks

After a strong rip higher yesterday, consumer-facing stocks eased today on a mild round of profit-taking.

  • Myer: - 3.39% to $0.57c
  • Treasury Wine estate: -2.91% to $10.36
  • Aristocrat: -1.37% to $39.49
  • Endeavour: -1.25% to $5.13

Banking sector

  • Macquarie: -1.69% to $167.96
  • NAB: - 0.58% to $29.15
  • ANZ: - 0.50% to $24.58
  • CBA: - 0.3% to $106.04
  • Westpac bucked the trend, + 0.28% to $21.85

Mining sector

Despite extreme volatility in commodities, such as oil and gold, iron ore has remained a beacon of stability, trading at around $129 per tonne.

  • Fortescue: +1.06% to $25.34
  • Mineral Resources: + 0.67% to $60.14
  • BHP: + 0.11% to $47.27
  • Rio: + 0.88% to $127.56, bolstered by news that the giant Simandou, iron ore mine in Guinea will come online in 2025, a year earlier than expected

Financial services sector

Finally, today, signs of life in the embattled BNPL sector - leveraged to expectations of RBA rate cuts.

  • Zip: + 17.86% to $0.49c
  • Sezzle: + 5.37% to $16.10
  • Block: + 3.79% to $103.22
  • Humm: + 1.16% to $0.44c

ASX 200 technical analysis

Following yesterday's surge and close above the 200-day moving average at 7160, the ASX 200 is well placed to extend gains towards range highs at 7380/7400. Aware that a sustained break above 7400 would lead to a push towards the February 7567 high.

ASX 200 daily chart

Source: TradingView
  • TradingView: the figures stated are as of 7 December 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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